Numerous studies present a somber image of knowledge of finances in the UK among those who do not work in the financial services sector. Adults who lack fundamental financial knowledge and lack self-assurance in financial affairs frequently find themselves in the spotlight.
When these people were young children, neither their parents nor their teachers taught them about financial matters, and studies frequently demonstrate that little changes over time. However, this just tells part of the tale. Could it be that young people are more financially knowledgeable than research indicates?
Discussing money
People who have little financial literacy as children often go on to become parents and, in some cases, teachers. These people may not have the knowledge necessary to instruct the following generation in personal finance.
The Treasury and Pensions Service informed us back in June that only 47% of kids aged 7 to 17 had “received an important financial literacy lesson at home or at school.” MaPs calculates that 5.4 million kids lack the financial literacy they would require as adults, including kids in the age group of five and six. The situation regarding financial literacy for today’s youth, according to other studies, may not be as dire as it first appears.
In contrast to 43% of those 65 years of age and older, 52% of those 55 to 64 years of age, and 58% of those 45 to 54 years of age, Royal London discovered that 76% of those in the 18 to 24 age range communicated to parents about finances as they were growing up. Being more honest about financial is a practice that is getting better across generations, but without those conversations promote sensible money management practices like conserving and budgeting, they won’t help children develop financial literacy as adults.
Nevertheless, recent research from the nonprofit organization Debate Mate and Now Pensions indicates that numerous adolescents do get the need of financial literacy and wise financial practices, such as saving for retirement.
The government’s proposal to lower the minimum age for automatic enrollment from 22, to 18 was backed by 86% of young people between the ages of 11 and 27. 89% of young people agree that pensions ought to be covered more in the national curriculum.
In his experience in the financial services industry, Michael Barton, an individual finance specialist at the financial literacy website Wallet Savvy, has observed “unexpected resilience and wisdom” in young people.
They are significantly more financially savvy than we frequently give individuals credit for, he argues, adding that it is simple to undervalue them. “Information about financial planning, investments, as well as cryptocurrencies is only a few clicks away according to the digital age.” The empowerment that results from this, in his opinion, “is nothing short of revolutionary.”
Barton recalls a client who, at the age of 18, had already begun saving for his retirement. “His understanding of the concept of compound interest wasn’t just hypothetical; he was living it, adopting the very essence of financial foresight,” the author claims. It was a wise awareness of what lied ahead and a commitment to his future.
According to Paul Rossini, CEO and cofounder of the digital legacy platform AssetPass, the younger generation is becoming considerably more financially educated than prior ones. He claims that the global epidemic and current cost-of-living issue have regrettably taught young people the value of making plans in case the worst happens. They have also learned the value of saving money and having multiple sources of income thanks to social media sites like TikTok.